Home World Business Perpetual cops a Brickworks through the window

Perpetual cops a Brickworks through the window

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The Federal Court has thrown a brick through the windows of investment house Perpetual. And not before too long if you’re sitting in the Millner family’s camp.Justice Jayne Jagot is the thrower-in-chief after she found the cross-holdings of Brickworks and Washington H. Soul Pattinson linked to the Millners did not impact on teeny tiny shareholders such as one of Australia’s largest wealth managers.Sure, Perpetual had a mum and dad type investor on its side at one point or another over the years in the form of venture capitalist Mark Carnegie, who’s definitely a dad but not really a retail investor.At stake, according to the minority investors, was $450 million in uncorked value on both entities.The cross-shareholdings were set up four decades ago when it was the 1970s and corporate regulation had a different vibe and probably wore flares. It means that today Soul Patts owns a 44 per cent stake in Brickworks and Brickworks has a 42.7 per cent stake in Soul Patts.Perpetual had argued the cross-holdings were oppressive to other shareholders because they allegedly disenfranchised minority shareholders and allegedly “entrench the incumbent boards and as a result, the control of the Millner family, and depresses the price of shares in each company”.The Millner clan led by Robert Millner is one of Australia’s richest and they view their holdings in both companies as “ghost holdings”, which we imagine is because they are annually haunted by both groups’ dividends.

The stoush started about 10 years ago but really heated up in 2013 when Brickworks sued Carnegie’s outfit M.H. Carnegie for rattling its cage and Perpetual filed a counter-suit.But Justice Jagot found Perpetual had failed in its attempt to prove the Millner family maintains the cross-holdings in order to entrench the control of the companies. “The cross-shareholding may reasonably be seen as having provided each company with material benefits as a result of diversification, which has reduced earnings volatility,” she said.

Illustration: John Shakespeare Illustration: John Shakespeare 

Correct weight

For a minute the legal minds at the country’s largest wagering company, Tabcorp, looked like they had backed a winner. Their high-stakes strategy – to bypass the Australian Competition and Consumer Commission and take their bid to merge with Tatts Group directly to the Australian Competition Tribunal – paid off rather handsomely.

The tribunal was made up of Federal Court judge John Middleton, businessman Grant Latta (who attentive readers might remember from his time as chairman of Vision Systems and Bennelong funds management or even his five years running Pacific Brands in the nineties), and economist Darryn Abraham.

Washington H. Soul Pattinson and Brickworks are chaired by Robert Millner. Washington H. Soul Pattinson and Brickworks are chaired by Robert Millner. Photo: Robert Tuckwell

The trio surprised many in the gambling industry by deciding to green-light the $11 billion Tabcorp-Tatts merger with just one negligible condition. Rival betting companies, Victoria’s racing authorities and the ACCC had all raised major concerns about how the merger would hurt competition. Perhaps the biggest objection centred on how Tabcorp’s broadcast business, Sky Racing, would inflate the merged company’s market power in dealing with pubs and clubs.

The tribunal rejected them all. And Tabcorp told the stock exchange that afternoon that the merger deal could be sealed as early as next month. But the tie-up isn’t over the finish line just yet. The head of the ACCC, Rod Sims, has launched the equivalent of a stewards’ investigation. One imagines he thinks the saddle bags were looking a little light despite his best efforts. What that means in the real world is that Sims has now filed in the Federal Court an appeal of the tribunal’s decision to approve the merger.

Sims is accusing the tribunal of making three major errors, mainly to do with how it weighed whether the benefits of the merger outweighed the detriments. CBD awaits, as one often does at the track, the call of correct weight.

Molopo sale

The Takeovers Panel appears to have hammered the final nail in the coffin of the ill-fated raid on corporate cashbox Molopo Energy.

Rob Millner, chairman, and Todd Barlow the chief executive of Washington H. Soul Pattinson on Monday July 10. Rob Millner, chairman, and Todd Barlow the chief executive of Washington H. Soul Pattinson on Monday July 10. Photo: Louie Douvis

Keybridge Capital and Aurora Funds Management had been trying to dump the Molopo board and install their own management – presumably with one eye on Molopo’s $67 million bank balance.

Things started going badly for the Nicholas Bolton-backed bid last month when the Takeovers Panel found Keybridge and Aurora were associated, and then shareholders voted against changing the board.

But the cherry on the cake came on Monday when the Takeovers Panel announced that a review of its finding of unacceptable circumstances in relation to Keybridge and Aurora stands.

The review panel made a new declaration of unacceptable circumstances, having considered that Keybridge and Aurora were associated in relation to Molopo and contravened section 606 of the Corporations Act.

“As the initial panel found, the involvement of Mr Nicholas Bolton and Mr John Patton gave rise to unacceptable circumstances from 10 August 2016 in relation to the affairs of Molopo,” the Takeovers Panel said in a statement.

The panel ordered Keybridge and Aurora to sell Molopo shares they had bought since that date – that means 3,666,285 Molopo shares held by Keybridge and 39,540,910 shares held by Aurora. The orders also state that neither Keybridge nor Aurora (or their associates) may acquire shares in Molopo for six months.

Ninja knockout

Amid all the drama between the Seven Network and former staffer Amber Harrison was some good news for the television station. New numbers reveal that Seven has won 25 consecutive weeks of ratings. That encompasses the Nine Network’s stable of mega-rating State of Origin games one and two. According to the latest ratings survey, Seven won for total viewers, 16-39s, 18-49s and 25-54s across prime time.

Nine has now launched its rating star, Australian Ninja Warrior, which some wags told CBD they are calling a 2017 version of the 1980s show, It’s a Knockout, but we doubt the royal family will come back and make an appearance as they did in 1987.

With the embattled Ten Network now having the popular Offspring program back on air, it too may make a dent in Nine’s State of Origin decider in Brisbane this week. But don’t discount Aunty ABC when it brings back the ever-popular Utopia, which makes any court case pale into insignificance with its focus on the minutia of bureaucracy.

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